Good afternoon, everyone. welcome back to the fourth and final day of the 41st annual JPMorgan Healthcare Conference. Very excited that we were able to be in person this year, luckily the weather is showing off at least one day of the, of the week. My name is Lisa Cohen. I'm an associate with our investment banking group based in San Francisco. Very excited to introduce our next company Asensus Surgical. As you likely know, we will have a Q&A following the presentation, so we will have a mic runner to the extent you have any questions. With that, I will pass it off to Anthony Fernando, President and CEO, and we will have Shamez Rampertab coming up for Q&A. Thank you, Lisa, and thanks all for joining us online as well. Thank you to JP Morgan for the invitation to present, and glad to be here in person. What I'd like to do is just to, you know, first off, just talking about forward-looking statements. You can find this online and all the information related to our forward-looking statements and risks. Who are we? I mean, we are kind of a hybrid company with robotics moving into augmented intelligence, machine learning, really bringing a digital surgical platform to market. We are the first company to have a fully integrated machine vision and AI platform on the market globally. Many technology firsts that I will talk about here briefly. A very compelling procedure economics. Also show you some data there. We performed well over 8,000 surgical procedures all over the world. 100-plus surgeons and multiple training centers throughout the world. What we believe in is, you know, we believe in digitizing the interface between the surgeon and the patient, and by doing so, we believe that we'll be able to unlock clinical intelligence that's currently not leveraged in surgery and to create a new standard of surgery, what we call Performance-Guided Surgery. Before kinda explaining, I just wanna give you a sense of reality. If you really look at the data, one in five patients undergoing a surgical procedure has a complication of some sort. This is the reality today. I think from a patient point of view, it's not a good place to be, and even from a provider point of view, it really impacts the bottom line. It's something that you can leverage. Robotics is just another tool that works together with the surgeon to perform the surgical procedure. I think the real value is in the digital AI, the data element of it, which can truly make a difference, which we strongly believe, and we've been investing quite a bit over the last several years to bring this to market. How do we address this? You know, we believe that you have to take a holistic approach beyond instrument manipulation, which primarily what robotics does, and leverage that and add on to it the intelligence, the cognitive part to surgery. In, you know, in order to achieve this in a holistic way, you need to increase the safety, reduce the variability in surgery, and also be a guide to the surgeon, leveraging the vast amount of surgeries performed from a knowledge point of view to talk about best practices. Also to be able to provide real-time analytics to the surgeon while performing the surgery, not after the fact. Then I'll show you some videos as well in talking about it. Before going into it, just to give you a brief explanation of the platform. It could be a 3-arm or a 4-arm manipulator with a console where the surgeon sits and performs the surgery. There's some very unique technology built into this system. You know, we call it the digital fulcrum. This is a point in space where the instrument enters the abdomen. It's a 3D point that gets set virtually. Now, because of insufflation, the amount of force that you apply on the patient is significantly reduced, which it's dynamic. It changes with time. It's open architecture. As you see, the surgeon has full view of the entire operating room and be able to communicate very effectively. We're the only platform to offer haptic feedback, so the surgeon actually feels what the instrument tip is feeling inside the abdomen of the patient. Fully reusable instruments. There are no clogs. There's no limit to the usage of the instruments, and that translates to significant economic saving on a per procedure basis. Looking at the console just a little closer, you know, the 3D visualization is a very big benefit so that the surgeon can see the depth perception. Eye-tracking camera control is another unique feature where the surgeon gets an additional level of control. If you think about the surgeon performing the surgery, you have two instruments in your hands, your left and your right, and then you have an assistant typically moving the camera. In this case, the surgeon's eyes. Surgeon can gaze on the screen, and that gaze will move the camera. Now the surgeon can do three things simultaneously, historically, which was not possible. Haptic feedback is also something that technology took away from traditional laparoscopy or traditional surgery, and we've now brought it back on a robotic platform so that the surgeon has a good sense of touch. In order to make surgery possible, there's a whole slew of instrumentation that's required. Our portfolio offers a full range of core laparoscopic instruments. Also, we created a new standard for robotic minimally invasive surgery by offering 3-millimeter instruments. The standard laparoscopic instrument's 5 millimeters, and this has really opened up a whole new area for us in pediatrics. Pediatric surgery was primarily performed laparoscopically, but when you couple the 3-millimeter instruments with haptic feedback, the pediatric surgeons have found it to be extremely helpful. We are already in several sites in Europe performing pediatric surgery and just in the latter part of Q3, we submitted pediatric indication expansion in the U.S. to the FDA, and anticipating clearance sometime in the first half of 2023. Articulating instrument is another area that the surgeons have been interested in, just giving them additional degree of freedom to manipulate inside the abdomen. Ultrasonic is another dissector technology that's offered. On the economic front, I think at, you know, I'll show you some data here shortly. Per procedure cost has been a key factor in decision-making of surgeons and hospitals to say what technology should I use, could I use in order to perform surgery. We have been able to develop this technology to be able to leverage fully reusable instruments similar to laparoscopy. It's a very familiar interface for surgeons. Use the same cleaning infrastructure within a hospital. It really streamlines the cost. Right now, several studies that we have done, if you compare a traditional robotic procedure with a Senhance procedure, you see a cost difference anywhere between 40%-70% per procedure from a cost point of view of the supplies and instrumentation that is used. Also, we offer, you know, multiple ways for hospitals to acquire the system. There's a lease-to-buy approach, there's a kind of a rental model, and also a capital purchase model. Depending on the volume, we can enter into different kinds of relationships. Technology and system is one thing, but regulatory is equally important. We have a very broad label across the world with the U.S., Europe, Japan, and many other countries that offer all the different specialties, you know, in general surgery, gynecology. Our goal really is to focus on high volume procedures. That's why we focused on general surgery and gynecology because those are the highest volume procedures across the globe. You know, thoracic pediatric urology, they're smaller in volume, even though there is a very good reimbursement there. Our focus has primarily been on the high volume, general surgery element. Moving on, I've kinda given you the basic understanding of robotics and surgery. Now I wanna kinda shift gears, talk about how the digital element fits into this, and how we can really elevate surgery and kinda change the game moving forward. We call this Performance-Guided Surgery. Performance-Guided Surgery is taking the precision of robotics for instrument manipulation and the digital interface for the surgeon, and then adding machine vision, augmented intelligence, and deep learning capability in a real-time setting. That this is not something, like I said, not something the surgeon has to plan before performing the procedure, nor do they look back after they complete the procedure. While the surgeon's performing the procedure, there's information and feedback that the surgeon is being given. Why is this important? You have to take a holistic approach in order to reduce variability and make sure you're delivering the best possible surgical outcome so that you avoid any kind of complication. When we talk about Performance-Guided Surgery, we're talking about three elements. There's a preoperative element, intraoperative element, and a postoperative element. When you look at all three, I think the most challenging part to realize from a technology point of view is the intraoperative part, because you need to provide data, analyze the data, and deliver it back to the surgeon in a fraction of a second. Like, I would say 1/30 of a second, you need to deliver that data. We have been able to accomplish that. We are the first company to get FDA approval for being able to do that. On the next slide, I'll show you a video there. On the intraoperative front, we are able to see the video, give the surgeon that feedback. Also the key element here is, you know... Let me take a step back. When you think about historically, the surgeon is the only one who has to have the ability to see what's going on in, inside the abdomen and make a decision. Now for the first time, the robot has a set of eyes. Through machine vision, the robot now has the ability to see. In addition to the surgeon, the robot can also see and tell the surgeon, "Hey, I'm seeing this. Are you seeing the same thing?" I mean, now there's a comparison, not just the one way where the surgeon makes all the decisions. Surgeon now has a so-called digital assistant to also see the same surgical site and form certain opinions. Preoperative, the setup of the surgery is very important so that you can have a seamless experience through the surgery. After the surgery is over, I think it's a good thing to do, you know, kind of a evaluation. How could this have been done better? How can this be improved? Instruments used, time taken, all of that can be assessed. These are two videos just giving you just a very small example of how this technology can be leveraged. Like I said, it's the first-ever augmented intelligence, machine vision system in surgery. Like for example, the top video is showing you real-time measurement in a 3D space. When you think about certain procedures, for example, a gastric sleeve, there are certain parameters you'd like to respect so that you can get a good outcome. Where you take part of the stomach out, you know the patient is going to lose weight and not gain that weight back. All of that's important because you need to set certain parameters, so you know what you did is exactly what you want to get. Prior to being able to measure, it's been more of an art. You need to get a really good surgeon who's done many, many, many procedures, who knows exactly what to do, and now you get a pretty decent outcome. Now this is really taking that art and converting it to science. You can be very precise with what you do, and you know the variation from patient to patient, and based on that, you can change how you perform your procedure. A very high accuracy, you get ±1 millimeter accuracy, and this is all based on machine vision, and you don't need any other additional tools or equipment in order to accomplish this. The second video that you see is a traditional hernia. If you're working on a hernia, you need to put a mesh, you need to size the mesh, and the chances of you getting that size right the first time is relatively low. Sometimes you get it right, sometimes it's oversized, sometimes it's undersized, and there's a pretty significant amount of waste in mesh and also time, and it could lead to a complication if it's not done right. Here, with these tools now, you can measure the hernia, you know the size of the defect, and you can communicate that to your assistant in the OR, get the right size mesh the first time, and get it done, saving time and saving the, any wastage of mesh. These are just illustrative, but there's a suite of these digital tools available now through the Intelligent Surgical Unit, and that's what we've been continuing to work on, is expanding that digital portfolio to be able to provide real-time decision support to surgeons so that the surgeons can have the ability to make decisions. That's one piece of this, and also second piece is the cloud element of this. There's a very big data element, because the more data we have, the better the predictions can be and the more informative this can be. We are in parallel building the cloud infrastructure to extract the collected data and extract insights from this data to be able to help inform surgeons and outcomes moving forward. How are we moving forward? I think that these are the four elements that we are focusing on right now in order to deliver this digital surgery outcome. Educating the surgeons of the benefit, increasing procedure volumes. I mean, like I said, procedures are really what drives us because it's data. Every procedure we collect, there's a significant amount of data that we can collect, and that data becomes insights that gets fed back into our AI algorithms and machine learning algorithms, and we continue to improve that. Procedure volume is a huge focus for us. Also the data collection analysis, there's a lot of work there in the portfolio. Like I said earlier, this is one of the studies that got completed in gynecology, just doing a direct head-to-head comparison using a traditional robotic platform, in this case, da Vinci, and our platform, and then also looking at traditional laparoscopy. You can see the costs between Senhance and laparoscopy are very similar, and case times are less than what it could take da Vinci. You can do it faster for significantly lower cost. This holds true in many other procedures, and we are working on multiple publications similar to this to do head-to-head studies, and showcase the differences in economics and procedure time. You know, the more we do this, we can even get to the outcome stage to show that there is no difference in outcome. As it stands today, laparoscopy still remains the gold standard in surgery. If we can match up to laparoscopy and be efficient and do it in a cost-effective way, I think it will significantly reduce complications and variability and help surgeons significantly. Procedure volumes have been growing very, this is a huge focus of ours. You know, we have, These are preliminary numbers, approximately 26% growth over prior year. In terms of case volume, is a huge focus for us. Like I said, every case we collect a lot of data that comes through that procedure, and it's significantly important. This platform being a digital laparoscopy platform, it's very... It has a very broad applicability. It can be used in urology, gynecology, general surgery, you know, bariatric, colorectal. Anything laparoscopy can do, the Senhance platform has very good applicability and can be performed. It's not a niche product just for one specialty, or any specific procedure. Advancing the digital platform, this has been the biggest focus for the company over the last couple years and probably one of the more complicated things to do, is that, you know, digital capability takes a lot. And in order to do that, we need to first get the procedure data, videos, and then that gets processed into insights through annotation, and all the AI algorithms. It becomes. Now we take the insights, and then there's those insights. Accumulation of insights need to feed back into, informing the surgeon of what best practice is in order to get better outcomes through reduction of variability. It's a circle, kind of a loop that has to continuously run. The more procedures we do, the better we are going to get every day, through all this infrastructure we have. We have several good partners that we are working with on the AI front and on the cloud, data front to build this infrastructure and it's just getting momentum as we... It's kind of a flywheel effect, you need to start it, and then it starts to spin faster and faster. On the portfolio front, there's been a lot of activity across all our global teams, and it's focusing on 2022, like I said, the pediatric indication we submitted, articulated instruments, we launched that. expanded intelligent surgical image features, we're expecting the CE mark, you know, any day now. It's been a quite a while working through the MDR process. We anticipate getting that sometime in the first half. I'm hoping very early in the first half, but that's still to be determined. Again, a lot of R&D into cloud data management and all these digital capabilities. These come from global teams. We have our R&D center in Israel that primarily does all the AI machine learning work. Robotics R&D in Research Triangle Park, North Carolina, and then also some electrical engineering and robotics work that happen in Milan, Italy. It's a global R&D effort that brings all of this to life. On the business front, again, just last year alone, like I talk about, 26% growth over prior year. Revenues somewhere in the range of $6.8 -$7.4 million. We did replace nine additional systems last year in Europe and Japan primarily, and then the pediatric indication. From a balance sheet point, we currently have $74.4 million on our balance sheet and no debt. Really for us, what we are really trying to do is we are reimagining surgery. Not just saying, "Okay, let's take a robot and perform surgery," compared to how it was done, but really trying to reimagine how can we deliver a better outcome and how can we deliver better experience to the surgeon, and how can we reduce the cognitive burden on the surgeon, so that the surgeon can focus on the critical tasks that they are trained to do and take care of all the routine activities and be able to share the knowledge similar to what we see in all the other industries. Whether it's automotive or self-driving cars, aviation, whatever it is. All these AI algorithms and digital technologies are support tools and are becoming critical tools, but it doesn't exist in surgery yet. That's kind of our goal, is to bring these to life over time. Thank you for your attention, and I appreciate you joining the presentation. Thank you. Lisa, turning it over to you. Thanks, Anthony. I didn't properly introduce Shamez earlier, but Shamez Rampertab is EVP and CFO. With that, any questions from the audience? Yeah. Thanks for the presentation. That was a really good overview. There's obviously a lot of competitors in this space up and coming. How are you differentiating yourself? What's your strategy? Is it type of surgery? Is it geography? What's your kind of strategy there? Yeah. I think, the differentiation is trying to bring the robotic manipulation and the digital insights. Yes, there is quite a bit of companies talking about robotics. On the digital front, I think we are way ahead of the digital technology because we've been at this since 2018. The digital element will be the differentiator. Also from a robotics point of view, it's not the simplest thing to build or develop. It takes a lot of knowledge and a lot of field experience to be able to do that. The fact that we've been able to perform 8,000+ surgeries in a safe, effective manner, I think gives us a lot of confidence on being able to do that. Also the other piece is the economic front. There's a willingness to pay, but the willingness to pay has to be correlated with the outcome that you're getting. There's not a willingness to pay more for a similar outcome. I believe that the digital element will really up the game and be able to do that. Today, the real-time digital extraction of data and support tools, there is zero competition on that front. Very good. With that kind of data, how much quality improvement are you seeing from kind of pre-data to then going through with the surgeon and coming back and then analyzing it later? Is that something you're looking at? I think I wouldn't be able to tell you here's the improvement. It's too early to do that, because in this data world, you need pretty large sums of data. Right now, where we are at, is we have the infrastructure to collect the data, and we are collecting as much as we can, and then probably once we get to, you know, 10th or north of 10,000, I think that'll be a time to start looking for patterns and looking for trends. We are building the infrastructure, collecting the data, and we have the ability to interpret it, but we are not at a point where we are able to measuring, saying pre and post. Yeah. Got it. Thanks. Very exciting. Are you attempting to get follow-up data on the patients' longer term outcomes to correlate with what actually took place during the surgery? Yeah. The follow-up data, this has been a very big point of interest from the surgeon community because they all know what digital can do. The question now is, you know, who gets to follow the data, who gets to own the data. It's active conversation between the surgeon community. And we would support it, and I think that would be the true outcome for us to do that. From our point of view, I think we'll probably consider one or two very specific procedures and be able to demonstrate that and hoping that would interest the surgical community to come forward in a much bigger way to do a much broader study. I think it's... Our ability to do it is not as good as a surgeon community trying to do, but it is a huge point of interest from the surgeon community. Right. Thank you. I know you've seen. Oh. In terms of training for your surgeons, have you got partnerships with universities where you're trying to get new surgeons to want your equipment over someone else's? Yeah. Are you just looking at hospitals? Yeah, great question. I didn't talk about it. We call our platform a digital laparoscopy platform because we mimic laparoscopy in terms of instrument manipulation and setup. If a surgeon is trained on laparoscopy, we can train them on the equipment in a day and a half, and they become... They're pretty good at using it because it... They see the same instrument. They work in an inverse fashion. There's not a whole lot of training required in order to use the platform. I think the training element... It's not so much a training element, but the learning element will come with the integration of all the digital features because now it's more information, what you do with the information and how do you use what tool is relevant at what point, I think there will be something there. As of now we are focusing on the fundamentals of laparoscopic surgery and following that same pathway in order to reduce the training burden for the surgeons. I know you've seen an acceleration of your system initiations in Germany and Japan. Can you tell us a little about how you drove those adoption trends and how that can translate to other geographies? Yeah. Germany and Japan are currently our largest markets. I think the biggest thing I would say that's working for us is it's becoming more of a peer-to-peer approach because you have multiple hospitals in Germany, and then surgeons talk about it. Other surgeons want to come and see it, hear directly from surgeons in their own, you know, geographies, and then that leads to interest. Because for us, our focus is primarily on market development. As a result, we don't have very large sales teams in these different geographies. We provide clinical support, and we also drive procedure adoption. The peer-to-peer network and kind of flywheel is what's working in Germany and Japan. Also the second element why those two markets are growing are those are very dominant markets for laparoscopy because of cost and their healthcare system support. They are very conscious about procedure costs. We have a majority of surgeons who are lap trained. It becomes a perfect match. They want economical solution. They are already trained on laparoscopy, and we don't have to disrupt their flow in terms of adopting the technology. That's. Super helpful. Now I know how procedure volume trends are another bright spot for you guys. Can you tell us a little about the growth you saw, you know, in 2022 and what really spurred that increase? Yeah. I mean, extremely pleased with the growth. The number of, you know, 26 plus. Again, it's preliminary, so hopefully it's gonna go up when we get consolidate even more data coming from all the different geographies. It's a very good accomplishment. Also the growth really comes from surgeons getting used to doing it. We know several hospitals, they have now become so proficient that they are even faster than laparoscopy using the system because they've performed 3, 400 cases. I think that's something that we are growing. Again, our focus is, has been procedure volumes. We want to collect the data, and we want to record the data. We are also... Like I said, we have more clinical people than sales people, so we are trying to drive adoption on a case front, and I think the result is pretty clear from that front. It's a familiar approach, a technique for doing surgery, so it's not a big hurdle for surgeons to perform. I know you're seeing, you know, an increase in account penetration, whether that's hospitals having more surgeons on the system or adding another system. You know, what are you learning from those customers, and how can that be leveraged into newer hospitals? Yeah. This year actually was a pretty important. 2022 was a very important year because we saw one of our hospitals in Japan, they just signed up for their second system. They already have one system doing extremely well. Done over 300 procedures, and they signed up for a second system because they had demand for more surgeons wanting to use it, and the system was getting in the way. It didn't allow. I think again, it's a matter of time. I mean, it's We've kind of been active in decent volume for, I would say, probably the last three and a half years. I think we're just getting to a point where there's more provenance and there's data. Each hospital can start looking at their cost and procedures and efficiencies. I think we're at a point where the hospitals are realizing, saying, "Okay, this didn't economically, it didn't hurt us to have this system. It actually neutralized everything, so why not increase the procedure?" I mean, like I said before, volume is the winner for us. Higher the volume, the cost stays flat. Higher the volume, the cost doesn't go up. That's why we are trying to push for volume. Any hospital or surgery center that has volume, we know we can get a very nice total cost of ownership that cannot be compared. Very exciting. half the price of a da Vinci procedure is pretty impressive. I'm just curious on your gross margin for those instruments. Can you talk about that? Sandy, would you like to answer that? Sure. We're at the early stage of our commercialization path, so we're not generating those positive gross margins. With volume, the target is your traditional med tech gross margins in the 50%-60% range. What's next? You know, you touched on it briefly, but what's next in your development pipeline? What are you most excited about? Yeah. I think the real value for us is to change this dynamic of surgery from robotics to digital. I think we are very well suited for that because there's so much more than a robot in order to deliver low variable, low variability and predictable outcomes. Like I said earlier, you know, surgery all this time has continued to be an art. Surgeons get trained. I mean, a surgeon from the time they graduate medical school, it takes about 6,000 hours of training before they do their solo case. There's a lot of training involved to get there. I think with these tools to help guide surgeons, It'll be a big paradigm shift. I think we are at the very early stage of trying to do that, and we have the platform, we have the tool, and we have the support of the surgeon community from countries like Japan, Germany, and even in the U.S. There's a pretty good cohort of surgeons who are working with us very closely, who are saying, "Okay, it's time that this change, and they can use the tool." I think the digital cloud data side of things, it will continue to be a very strong focus while we continue to offer the tool sets for the instruments and the robotic platform. Thank you so much for a phenomenal presentation and the vision to imagine surgery. My question is similar to the analyst question. What's next? If we have the time machine to look five years ahead, what are the other international markets that you're excited about? I guess volume is, from a market point of view, it's really going after volume. We picked, we picked Japan because it was the second largest robotics market, and it is the largest laparoscopic market in the world. Looking at Germany, from a robotics point, it's somewhat under-penetrated compared to other Western European countries, primarily because of cost. They had a high laparoscopic training level. We are trying to scale and build enough critical mass in certain geographies, primarily to help build our data set. Obviously, wherever there is volume is what we are focusing on to move into. I'm wondering if you can help us understand the most impactful learnings for the surgeons who have used the system. Sure. On from a digital point of view, I can say it's the precision and being able to say, "Okay, this is how I did this case." For example, if you go back to a gastric sleeve procedure. The surgeon can say, "Okay, this was the size of the stomach, and I used a 4 centimeter margin from the pylorus in order to put my staple line, and I got this kind of result. Now I know that this 4 centimeter margin was 70% of the overall line." That, it becomes now formulae for the surgeon to help improve his or her practice to be able to deliver a predictable outcome instead of trying to say, "Oh, should I put it here? Should I move it there?" Kind of thing. That level of precision and predictability, it is something very important to them. The second piece is about the cognitive load of the surgeon, because surgeons sitting in the OR, they are getting all kinds of information, and now we can take care of some of the very mundane tasks without any surgeon intervention. The camera movement. The surgeon can just flip a switch and put it on what we call Follow Me, like autopilot. Now, the surgeon doesn't have to think about the camera. Wherever the surgeon moves the instrument, the camera will follow you and look at what you are doing. Many of these routine tasks get taken away when the surgeon can just focus on the task at hand and, you know, focus on the anatomy and saying, "Okay, this is what I need to do." Those kind of assistive tools are things that surgeons are wanting more. Just like your car, you know, we have a backup camera that we look at. Things like that now, there's a feature we also are coming up with called a no-fly zone. The surgeon can just draw a line and say, "Hey, don't let my instruments move out of this box." It will stay inside that box. You reduce the chance of injury or accident significantly now because the instrument will not violate that boundary. Those are the kinds of things that surgeons are looking for, to try to have a lower threshold, more peace of mind, while they are performing the surgery. Do they get a digital report card afterwards? Do they have to watch the whole case to get that measurement? No, no. the stomach? This is real time. Real time. Okay. While they are performing the surgery, they just click a button and they can measure, they can see everything real time. This is not after the fact. Well, we are... Oh, did you say one more question? One more. That's it. Sorry, just one quick one. Mm-hmm. Unit eco-economics from the hospital perspective, why are you attractive? I think it's really the per procedure economics. I think from a CapEx point of view, I would say we are pretty equivalent to everybody else, but it's, the per procedure economics, like I said, are significantly lower. Then if you do a total cost of ownership over a number of years, then the per procedure cost will be the factor that's different, which will offer the lowest... lower cost. Well, I know we're up on time, but I'd like to thank everyone for joining today, and a special thanks to Anthony and Shamiz for sharing the event with us. Thank you. Thank Thank you very much. Thank you very much.